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Whirlpool's 3rd-Quarter Earnings Surpass Estimates, but Revenue Falls Short

Whirlpool Corp. (NYSE:WHR) released its third-quarter financial results on October 22 after the market closed. While the company's earnings surpassed expectations, its revenue missed the same on account of lower appliance sales in Latin America.

Snapshot of the quarter

The Benton Harbor, Michigan-based company recorded adjusted earnings of $3.97 per share for the quarter, surpassing Zacks' consensus estimate of $3.96 per share. However, the reported earnings were lower than the $4.55 reported in the year-ago quarter. Revenue plunged 4% to $5.09 billion, which missed analysts' forecasts of $5.15 billion.


In a statement, Whirlpool's chairman and CEO Marc Bitzer said:

"We have sustained momentum towards achieving our long-term financial goals despite global economic volatility and remain committed to our robust strategy for creating shareholder value....Our fundamentals remain strong, and we made solid progress against our stated priorities with near-break even performance in EMEA and strong results in North America."

At the end of the quarter, the company had cash, cash equivalent and restricted cash at a combined $999 million. Long-term debt amounted to $4.1 billion.

Region performance

At Whirlpool North America, revenue rose a meagre 0.5% to $3 billion in the reported quarter. Operating profit came in at $387 million, up from $343 million reported in the year-ago quarter. During the quarter, the company experienced favorable product mix that was only partly offset by mounting costs coupled with a fall in unit volume.

Revenue for the Latin America segment declined 28% on a year-over-year basis to $632 million. Sale of the company's Embraco compressor business during the quarter hurt the segment's revenue. Third quarter operating profit amounted to $29 million compared to an operating profit of $49 million reported in the prior year.

Sales in Europe, the Middle East and Africa dipped a combined 3.8% to $1.1 billion. The same metric dropped 0.4% in Latin America, barring currency translations. The company recorded an operating loss in the segment of $18 million, which was lower than the operating loss of $39 million reported in the previous-year quarter. During the quarter, the company benefited from cost reduction initiatives and lower raw material inflation.

At Whirlpool Asia, sales soared 5.7% to $358 million. Excluding the impact of currency, sales rose 7.1%. The segment's operating profit stood at $9 million.

Financial forecast

The appliance maker projects 2019 earnings per diluted share will be between $14.75 and $15.50.

Operating cash flows are anticipated to be around $1.4 billion, with free cash flow of roughly $800 million for the whole year. The guidance includes a restructuring cash expense of $200 million and capital expenditure of nearly $625 million.

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.